tv Squawk on the Street CNBC February 15, 2013 9:00am-12:00pm EST
let's get back to our guest host. your book, which is out, it's about leadership. what's the main point? it starts with i guess the person that you're looking at in the mirror, right? >> that's you. the point of the book is leadership is not well understood. it's about having the ability to figure out what you believe and then the guts to act on it. in a way that helps, adds value to others and great leaders are willing to ask questions. they're willing to say, i don't know. they're willing to say, i was wrong. they're willing to change their
mind and leadership is not about being certain. it's about being willing to step back and rethink and ask the right questions, but a lot of leaders struggle with that. they think they got to know all the answers and i don't think they do. >> absolute power corrupt, absolutely. i see it with ceos all the time and when we ask them hard questions, they look at you, like, what? their employees never do. >> well, the great companies, you'll notice -- great companies have a culture where people are willing to speak up and great leaders cultivate those kinds of people. >> robert, thank you so much for joining us this morning. >> thank you. >> and thank you, everybody, for joining us this morning. enjoy that long weekend. we will see you back here on tuesday. right now, it's time for squawk on the street.
>> welcome, live from the new york stock exchange. jim cramer is off today. the u.s. session here, we just had empire state manufacturing crossing, turning positive for the first time since july. we see futures hugging the flat line pretty much. the s&p with a bias towards the green. in europe, the d-20 meeting is underway in moscow. your mixed bag as we have spain in the negative. japan's nikkei, that's one that's notable, dropping as yen strengthen for the fourth straight session. hang seng is wup and kospi is flat. >> our road map begins with a valentine that carl ichichan. it's the latest sell in the battle of the billionaires as the shorts feel the squeeze.
>> apple emerges as the battleground stock with the likes of einhorn and tsiros and low, getting out. >> they are off the boat. passengers on the carnival triumph finally disembarked in mobile, alabama, but the trouble may be far from over which facing the public airing from passengers, pictures and potential lawsuits. >> and many hedge fund managers seem to be abandoning the precious metal. let's start with herbal life. that puts ikhan at odds with bill ackerman. obviously, it happens on valentine's day and the day before, ackman was thinking carl and the likes of dan with their involvement in the company, it brings more scrutiny and more of
a spotlight on to the subject matter. he doesn't seem to want for turning up the heat. that is ackman. lobe is never named him. he's just called him the short seller. the story is just fascinating and we can all debate the fundamentals of herbal life. 76 years old, all his own money. carl describes himself oftentimes as a poker player and if you take that analogy through and think about him sitting down at a table with bill to play texas hold em or whatever it might be, his pilot shifts and his poker face is probably better. i just think the question here now is will there be a short squeeze and do you take your stock off borrow? today, ackman's going to suffer
some pain, but not that much. it could be a $160 million loss for him, but overall position, he's not losing that much. how are his investors feeling about it? not to mention, herbal life hired david boise. and with the statements that ackman has been making, right or wrong, one would imagine there is a lawsuit coming as well. that is going to be pretty significant. >> so, ikhan was on halftime last month famously with ikhan and ackman and there was this discussion of a tender, which would be damaging to some degree to bill himself. >> it would be a biggest squeeze. >> how likely is that? >> unclear. there was a speculation that the company could do a tender of course, again, this would just exacerbate a shortage of stock or force him to actually cover
to tend er in. that, i don't know, is in the cards and carl here has filed a typical deed, but it's not typical because one wonders, he's an economic animal. i wouldn't think he would do anything he would lose money on, even to settle a score. i know this is an important part of that, but he probably thinks he can make money on a position, also. >> yeah, josh brown's got a nice blog today called the new metric. the price to ego ratio. >> the thing about is you can do all sorts of rigorous analysis in this, but where are you model? do you put in visit hatred and ego. in this trade, you have to layer that on. with the personalities involved here. >> you do. i think you're right. listen, it's been remarkable from the start in what bill ackman has been willing to say about this company, calling it a
ponzi scheme. i think making a reference to bernie madoff the other day. >> he may be right, but that's not the point in this trade. you can be carried out on the stretcher even if you are right and that's the issue. >> trade or not, it makes for a great story. ackman is also fascinating. he's willing to take a great deal of risk. not just a 20%. a fairly significant capital commitment for roughly 10, $11 billion fund. but also, the risk that he's putting his business in to a certain extent by being so outspoken and in this very public fight with a guy who just doesn't stop. i mean, you could pick so many people to get in a fight with. the last you'd want to go to the table with the carl ikhan.
>> you have to think bill ackman thought about the possibility of a tender, so there must be some sort of protection. on that last fight, ackman was asked directly about the possibility of a tender. we didn't get any answers. you would think he is a smart guy and has thought about that. >> here's a brief litsen. ikhan and ackman on the "halftime" last month. >> this is not a nice guy and a guy who keeps his word. it's a guy who takes advantage of little people. >> a quintessential example that wall street, if you want a friend, get a dog. >> again, ikhan on sometime between noon and 1:00 p.m. eastern time. i don't know if ackman's going to be live as well. >> you never know with these two what they're going to do, but i remember that the sound bite of ikhan saying don't tell me what to do and here we are. >> yeah. >> happy valentine's day. >> a lot of people can trade
around. dan lobe i assume still has a meaningful position, but don't assume everybody is where they were. >> well, the nightmare cruise is over for thousands of weary passengers who finally disek barked the triumph last night. it docked in mobile, alabama after five days without power. michelle caruso-cabrera is in mobile. >> the triumph sits behind me in defeat. the technicians and owl the folks who have been flown in to fix it. we flew with some of them last night. in the meantime, they started disem bar kags last night around 10:15, put the people on buses to send them to new orleans. some of the folks who left late in the night arrived early this morning and they had a chance to talk with reporters who were waiting there. one woman jokingly handed a, one of the camera men the red bags
that have now become so famous for whatever needs you might have had while on the ship. they were just extremely relieved and thrilled to be getting out of there. once they're in new orleans, they then have to fly to houston and then get transported to the port of galveston, where many people had their cars if they had driven to the ship. take a listen to one woman as she got off the bus. >> we survived it. we're here. we're on land. thank god. >> being in the middle of the water without being able to see anything at all. it's not a thing. >> so, ccl's going to reopen in half an our. i'm curious to see how the stock trades. now this thing is potentially over and there's not going to be a lot more bad news considering what we've seen. if you're not familiar with carnival, they've got so many brands, not just carnival, but holland america, 15 ships.
princess cruises, 16 ships. sea born, p and o, and the costa ship from italy in january of last year. that was the most recent and dramatic and had the highest level of mortality. guys, carl, back to you. >> we'll come back to you live this morning for more on that. for more on the health concerns for the people who were aboard the ship, want to bring in a former carnival cruise lines doctor. an internist and cardiologist in the los angeles area. he was aboard for one week this past august. good morning to you. >> good morning. >> tough to generalize when you're get iting 3 or 4,000 different human stories coming off of this boat, but in general, are these health concerns serious or is this more of a giant inconvene ens? >> it could be very serious. there was problems with water,
toilets, there's from my reports, possible sewage issues and so, bacterial and viral infections are likely rampant. i'm sure many cases of stomach flu or bacterial infections, so this could be potentially serious problem. you have to realize this is a captive audience. this is a closed environment. and many things could potentially go wrong. in general, carnival and all the other cruise lines are very good about dealing with these situations. >> i know you're a doctor and not an attorney, but i'm wondering if the illnesses that came as a result are real enough to where any kind of lawsuits would have a standing chance in court? >> again, i'm definitely not an attorney, but in general, there's a possibility that they could prove a case.
anyone that flies or drives or gets in a ship knows there are a risks to that. this is kind of an unusual situation, but i would say the litigation would be handled appropriately. >> doctor, while the passengers may have gotten off the ship, are there any sort of lingering concerns out there? could there be illnesses or injuries that develop after they've left the ship? >> that's a great question. potentially, i would be careful to look for bacterial infections, diarrhea. people could be very stressed about this afterwards. post-traumatic stress disorderer. anxiety. even if that's the case, if people with heart conditions could potentially develop elevated blood pressure and even worsening heart disease from that, so potentially could be some lingering effects of the events that occurred.
>> no wonder, the clean-up's going to be very involved. thanks so much for your time. appreciate it. >> thank you. >> when we come back, wall street bracing for more economic data. ahead of the bell, industrial production and an exclusive with walter robb, the outlook has taken the toll on the stock. got a nice beat out of empire, but weal see what protection and confidence says later on this hour. we're back in a minute.
welcome back to squawk on the street. we have january industrial production coming in a little bit light. we're looking for up two tenths. on the utilization rates, 79.1%. that is a little better than we were looking for. we were looking for a bit under 79% and last month's was resifr 78.8 originally released to 79.3, so a split decision. a little light on production, on the utilization rates and we saw december tick day. the treasury and the national capital flows come out better than anticipated as well. if you look at net, it was 25.2 billion. long-term net, that was 64 billion. better than expect ed melissa le
x back to you. >> we are watching gold, it's heading for a six month low. citi making some bearish comments about gold and if it's in the process of peaking new, industries suggest gold could go into hibernation for a long time. meantime, the g-20 finance ministers in moscow also weighing on the metals markets, looking to see how they will deal with currency wars and in term of the pricing of the precious metal. we also saw a lot of hedge fund managers and granted they are a snapshot of where they stood at the end of last quarter, but some notable moves in terms of gold, tsiros, pimco cutting their bets in gold. >> the citi note's interesting. they say if history is repeating itself and you had the bull market in the '70s followed by years in the '80s, we cannot look for gold to exceed 1950 in
the next 20 years if it is peaking at the moment. they call it a long cycle metal. it tends to do that for a long time. would disappoint a lot of people who still see inflation as a longer term challenge. >> right and there's a surprising report from the world gold council finding the demand for gold in 2012 declined. so, that was a surprise given central bank, bankers wanting to purchase the precious metal, but it fell last year. that was a stretch for the market. >> meantime, have you seen the pictures of the meteor shower already? oh, my gosh. these pictures in russia, western siberia. reports now that this meteor, which landed, has injured some 500 people, although the cars barely noticed. people just kept driving. >> eyes on the road, they're focused. >> the meteor shower created a 125 mile long sonic boom. many of the injured were hurt by
sonic glass. the ministry is urging people not to panic. the g-20 is happening basically 1,000 miles away. unrelated to the asteroid which is going to fly by closely today as well, which people are afraid could knock out some satellites. only about like 19,000 miles in the air. don't panic. if glass is going to shatter randomly in your home, that's a little panic worthy, but -- >> when we come back, is now the time the bet on bonds? we'll hear from the man barren is calling the best around. also, an exclusive with kevin plank. he'll explain how his company plans to score with its new concept score. we had a little tick up, but still, that industrial production number was a slight risk. more straight ahead. i know what you're thinking... transit fares! as in the 37 billion transit fares
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minutes until the bell rings. let's bring in -- and a cnbc markets angalystnalyst. this is the most boring rally high i've seen. >> i don't know with why you got to be like that. come on. a rally's a rally. >> but there's no volume here. >> well, then what's that tell you? there's going to be some sell side. short side squeeze performance capitulation. you've got to think we're going to see a move.
a robust move. people can't afford to miss that move. you've got comets going off in russia, the chinese and taiwan lunar new year. it's a far out market, melissa, what can i tell you? duck the asteroids, i guess. advice for your viewers. sxwl is the g-20 going to be a big deal? the leaders get together, take a photo, issue a statement. >> i don't think we'll see much coming out of it. people are looking at the numbers that came out recently. britain came out with some retail numbers, so people focusing a little bit on that, too. today, we have expiration, so there's going to be liquidity events in the open. but overall, seeing all this merger activity coming in here, people are getting off the sidelines, looking to put their money to work. etf, the outflows is going into small stocks. people are trying to get. it's like a risk on type of trade. i would say that most of the indicators are indicating that we continue to trend higher.
that there's going to be a sell off, but then a base and then we're going to take off. >> what's the catalyst for taking off? do you think? i mean, we're coming out to a point -- >> it's happening so slow. >> i'm speaking to the point you were talking about before, about seeing the volume coming into the building. you're seeing that full scale embracement of the bull here right now. david, you look skeptical. >> he always looks this way. skeptic skeptical, that is. >> i can't help it. listen, i think your points are all good ones. i wonder as to whether we'll really see that volume come back. just feels it's been so long. kind of hard to imagine. >> true enough. could be a lot of things that could change. some of the talk you're seeing on the hill about tax treatment of derivatives and stuff, so will equities be more involved. it's correct -- >> it's hard to imagine. when you look at that long
button, you've got to think about the risks. all those bond funds and everything else. >> all right. gordon, good to see you. have a good long weekend. >> when we come back, an exclusive with whole foods ceo, walter rob. can the chain bounce back? it is the final trading day before the long weekend. and the opening bell is coming up next.
♪ all on thinkorswim from td ameritrade. ♪ you're watching "squawk on the street." we are live at the financial capital of the world where the opening bell is set to ring in about two minutes time here. there's a lot of watch as we head into a long three-day weekend. we could expect trading volumes to be light, but what a week it has been in terms of mergers and acquisitions. what would have thought we would have this big week, the biggest i believe since 2008. >> i believe if you exclude debt since 2005 so far, so we are
potentially back. it's funny, continuing to hear some precautionary words from ceos, but they have made a decision after a long time of waiting that it is better to put some capital to work. now, we've talked a lot about the low rate environment. saying we've got $11.4 billion sitting there, not earning much. let's put it to work. let's buy the rest of nbcu. heinz able to borrow at low levels and pay a nice 9% to warren buffett. you've got a willingness on the part of the brazilians to put 4.4 billion into buying heinz at 4.4 times eeb ta and they feel comfortable with a long-term cash flow characteristics of that business in terms of offering memo returns. >> we just finished the year
with the biggest corporate issuance on record. what's it going to take to say we're back? >> the bar is high for him. >> nobody can promote like jimmy, but what i want to see is the following on deals. they may be a sign thing rs going too far. i want to see the, another deal in that space because i feel like my competitors are getting ahead of me and strategically, i need to do that. perhaps in the same set. one deal forcing another. we saw the dell lbo, but in a way, it's a one off. they're only using a bill sor so dollars in private equity money. more of that. >> celebrate black history month, black employees at the nyc resource group doing the honors and an online money transfer provider celebrating
their ipo and that was an ipo that was oversubscribed. they had to increase the offering there and it did price above the range. >> talking about m and a, rich peterson says europe is not playing this game. year to date volume, 39 billion compared with 112 bill. interesting how it's happening on our shores. maybe eventually, the echo bleeds over there. >> harder to gain confidence in europe. however, some would say the bargains are really there. we talk about how in fact people are unwilling to put capital at risk at the time they should because they don't have the confidence. confidence tends to rise with the s&p. i mean, that is still your best barometer. we're up what, 6.5% this year? another reason we've seen increase. >> take a look at shares of herba
herbalife. >> by a measure of 12.98%, but still a nice pop for shares of herbalife. the question here is is carl going to engineer a further short squeeze by taking the company private or perhaps launching a tender. you can mechanically engineer that because in order to, you can't lend your shares out if you have to tender your shares. you have to take them back off the market, which is the spot. exactly. >> including when you're short. so when you're mr. ackman as well. >> yeah, it would be interesting if that happens. i'm not sure how the company, i think they're happy to see his presence to some extent because he can cause a good deal of trouble. >> to some extent, he's a white knight here. he's their best shot at squeezing bill ackman out.
>> and defending. they've done a reasonably good job of defending themselves. my sense is there's a lot more to come and they're finding back against the charges that ackman has levelled at them. >> i think it's interesting he's coming back on after he told wap ner. it should be great entertainment at noon. we're still seeing the trickling effect from the atfs this week. buffett taking about a 6 million share stake in adm, company which makes high fructose corn syrup, found in ketchup. adm's one of the big least leaders on the s&p. >> also in the food space, we're watching shares of campbell out with earnings up by 2%. they're back in their full year. this is the stuff that's been performing well. up 11% year to date. they have been working to stabilize and turn around their
soup business. they've been expanding beverages and saw gross margin sort of stable. but compare that to what we heard from kraft today. the northern american grocery business that was remaining after kraft spun out the snacks business. but they saw operating margins decline from 5.8% to 10. we have seen volatility on the likes of kraft as revenue came down by 11%. still, that stock was relatively stable today. >> shares of burger king worldwide, i think they're up by about 3, 3.5% many this morning. the company had a better quarter on metrics. opened more stores, revenues were above. same store comps, 2.7%. i think the estimates were 1.7% comp. we talk about mcdonald's, not clear if burger king's success
will have an impact or if it's a rising tide kind of thing. also important to note, 3g, those brazilians, they were behind the go private of burger king when they retooled the company to a certain extent and pershing square. >> bill ackman again. >> we can connect a lot of different stories through burger king, but that's got things moving higher. >> bill ackman's like having bacon. six degrees of separation. any way. take a look at shares of apple. out of these 13 f filings, snapshots of what happened in the fourth quarter. during the fourth quarter, that's when we saw apple's steep decline and a couple of major investors. as george tsiros increasing their stakes in apple while we saw some others entirely get out of apple, so sort of this battleground stock as people are
debating whether or not it's a true value stock and whether to get long or of this stock or whether or not it's a broken stock as dan lobe might be thinking at least right now. fourth quarter. >> keep an eye on boeing. we'll see. interesting news out of airbus. a big competitor they are going to go back to. nickel batteries in the a 350, not the lithium ion batteries, which we think have caused troubles with the dream liner. if it turns out this is really zeroing in on the battery and there will be a longer term fix, production scheduled are obviously key. you might see some action in boeing as well. >> did want to mention quickly time warner, it's not doing much today, but we haven't actually mentioned the stock in the last couple of days. yesterday, it was up r sharply. tim warner continued reports and discussion about the potential investing of most of their magazine portfolio. how that is going to take place,
still unclear. perhaps some sort of a trust deal with meredith, shares of which were up sharply, about 1. 8 billion, but the changing face is worth noting as it is slimming down to what will simply be a movie studio and lot of cable networks. >> next piece in the journal today, looking at the era from '02 to today. that chapter appears to be closing. was on with us a couple of weeks ago when we asked would you do a move like that, put publishing aside. he said it was an interesting question, then this pops up, broken in a magazine owned by time warner. bob pisani's on the floor. >> trader rs busy here. crowds are out. we've got an expiration today. it's not a quadruple, but it's an expiration. we've done a quarter million shares just on the floor of the new york stock exchange and
we're up today. have you noticed, february is not supposed to be a great month traditionally, but we're doing all right. the s&p 500, up 1.5% this month. we're doing, the rally is continuing. we're just up fractionally this week, but the fact is, we're rallying, the rest of the world is not. february has not been a good month for the rest of the world. you see brazil, it's down 3% in the month of february. mexico, which has been a huge ra rally, down 3.1% for february. germany's down spain's down, maybe -- i was asking some of the guys what they thought recently. i think the power of u.s. investor sentiment has been our best export. i like that. quote of the day. we're waiting for the g-20 to issue a statement. everybody's wondering whether they'll criticize even indirectly, japan, for its yen weakening policies, but most of the people i talked so said no way. they're going to criticize
protectionism. competitive devaluations. they'll advocate open markets. we'll get a statement probably in the next couple of hours. watching those stock market inflows. we've been seeing them for five weeks. six weeks now there have been inflows, however, the inflows are an international mutual funds. domestic saw outflows this week and etf stock funds saw outflows this week, so it's slowing down in terms of the amount of money going into mutual funds here. we're seeing modest outflows from some of the gold etfs as well. the gld, biggest gold etf saw outflows of 368 million. that's not a lot. only down about 0.5%, but it's csignificant significant. there's been a lot of comment about nasdaq saying they're going to start processing tra s tradeses at 4:00 a.m. i don't think this is going to make a huge amount of
difference. trading in preopen is light. only about 35 million shares nyse tells me, that's a drop in the bucket compared to the 3.5 billion that trade on the nyse. guys, back to you. >> see you later on. let's shift to bonds and the dollar. getting a lot of macro data points. rick santelli's day is far from done. hey, rick. >> and indeed you're right. a lot of data points. treasury international capital flows is always two months in arrears, so here we are in february, we're getting the december data, but it was pretty good. december, there were a lot of issues kind of unique to the u.s., but sponsorship by foreigners was still strong. some would say that's a dpraet thing. others would say keeps rates low for a variety of reasons that don't have to do with traditional measurements in the economy might be polimisleading.
not to you, the viewer, but maybe to congress. interday, we're up one basis point of the day. up six basis points on the week. one month chart shows you there is definitely an upward drift to interest rates moving higher. it's not aggressive, but we want to monitor. kind of 2% to 202. if you look at a one-month chart of the euro versus the dollar, 133.50 continues to be an important pivot and looks as though the euro may have turned against the green back, but the euro yen is actually down here. the cross trade everybody's trading. a bit of a different look on this. the yen's had a bit of a reprieve on its weakness. many think it's due to all the conversations going on. past g-7, future g-20. back to you. >> thank you very much, rick santelli. heavy selling in commodities. sharon, gold down more than a percent. >> breaking below that 16.25 level was key for the gold price
and we were talking earlier about gold and the world gold could be sill report a factor in this. but we are seeing heavy selling across the board in many commodities in oil and gold and we're looking at key technical levels. brent crude is about to have his first lost in a week's time and for wti, seeing whether or not we can hold above that level, but there's another play totally breaking the trend and that is gasoline. consumers are not going to be happy to hear we're look iing a prices that are up 11 cents here in the futures market. that has a lot to do with seasonal maintenance of refineries. looks like the spring rally is happening now and we're looking at prices at the pump that are 35 cents higher than a month ago at 3.64 a gallon. they could climb steeply, so david, it's going to be a lot more pressure on the consumer.
back to you. >> all right. thanks very much. did want to take a look at cbs shares. the company reporting earnings after the bell yesterday and as for the earnings, not that exciting. some pressure on advertising, but the reason the stock is up largely because of the decision by the company to accelerate its buyback of shares adding a billion dollars to that buyback and paving the way for what may be as much as $8 million purchase of shares quickly here in this year. there you see it in terms of what they repurchased last year and again, the acceleration of the repurchase program by a billion dollars thus far this year. will add $800 million on top of what was expected to be a $300 million buy back. that helping there. some analysts coming out this morning, david bank saying we think they could repurchase around 30% or around 200 million
shares in the next 24 months. as for the numbers themselves, they did talk about the market improving. ratings did improve for cbs through the end of last year. where they did not have a great start. in addition to buying back stock for a lot of these broadcast companies it's the retransmission dollars, the ability to raise rates for the retransmission of your signal on the cable networks themselves or on the platforms. that had been very important. cbs also telling us a couple of weeks ago that it would sell its international outdoor business and look to convert its domestic outdoor business to a real investment. mixed bag so far as we've kind of finished up with media earnings. we watched comcast, the big news there. our parent company. they're buying a rest of nbc
universal they don't already own, but that increase in cap ex corns some. time warner cable, direct tv, not great yesterday, so some at least some mixed stories in media as we put a wrap on most of the media earnings. >> what a week for news in that space. unbelievable. it's been a ton of it. >> and new buys. >> and last week, with liberty global overseas. >> when we come back, some food for thought, an exclusive with the co-ceo of whole foods. what's he sawing about the company and the narrower growth? take a look at some early movers on this friday. today is gonna be an important day for us. you ready? we wanna be our brother's keeper.
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pretty well telegraph. questions on whether or not this is some shift on the way consumers see or quanic foods or if this is just about getting big. which is it? >> we delivered a terrific quarter and accelerated our growth and we reaffirmed our guidance for the year. we demonstrated continues productivity to new stores. we have proved capital returns and improved value to shareholders. i think everything's on track. >> so there's no change in the rate of eps growth or same store sales growth at all? >> we did fine tune our guidance, but reaffirmed it. we just reaffirmed the same point. we did reference the slight m moderation in sales because we think the overall more uncertainty in the economy. but our big growth stories, we continue to be bullish on the trends and we think is a leader in this category. >> you did shave more off the top. went from 6.5 to 8.5.
now, 6.6 to 8. a lot of decision is whether or not you can hold the 7% level. how likely is that? >> well, fair enough, but we also raised the bottom and kept the midpoint basically in the same position. so we have to feel pretty good about the balance. that's why we're continuing to reaffirm the guidance. >> for a stock trading at this sort of a multiple, 33 times current eps, you know, you take a look at these same-store sales and you saw last quarter it fell below 8% for the first time in three years. you hear the company expanding stores by a rapid rate and you sort of wonder whether or not you are having difficulty attracting new customers at this point. can you talk to that? can you aly some of the concerns that consumers have out there about your rate of expansion and ability to keep the customers come back? >> let me just say the street has high expectations for a
company. we have high expectations for ourself. i think we've demonstrated we're continuing to attract these customers and if you look, we're accelerating the growth to 8% in 2014 and beyond and i don't think there's any evidence that we're not continuing to broadening our appeal. part of what we're talking about with the price investments is to continue to broaden the appeal. if we can triple the number of stores we have, that's our goal. that's big goal. that's the big prize we're going for here. >> but are you sacrificing margins? are you going down on the price level in order to keep those customers come tog broaden your appeal? are you giving up some of the premium in order to gain those customers? >> always your balancing value and quality. we're a quality grocer first, but we've got to have good values for our customers and you're always balancing those two. if you look at the margins, it's
improving in q2. we've been pretty consistent about talking about that, but i think we're strikie ining exacte right balance. i think the store is in tact and we're continue iing to grow the market share and we're the leaders in this category. >> a lot of those who still like your name say you're a best in class operator. no credible competition. why the plan then to moderate on pricing if there's really no one barking at your back door? are you sensing some hesitancy among the consumer on the marginal spending or what? >> i think you're seeing a backdrop, a background i'm sure you've been talking about it. there's more uncertainty with the gdp growth. i think you're looking at customers more attended to value. we're participating in a very competitive marketplace which we're very set up to do, but i
think you're always finding that balance between value and quality. >> so, it's not walmart barking you know, knocking at your door here going into the organic space and maybe undercutting you on price? >> absolutely not. we don't see them as direct competitors. we're about quality first. that's what we are in the marketplace. we're not trying to be all things to all people, but we've got to continue to bring good values to our customer and that's how we're going to continue to grow this business to the potential we think that it is. >> we always love having you. thanks for coming. at least to the phone today. >> happy friday to you. >> same to you. >> don't go away.
where you had back-to-back october and november reads both over 82, but the numbers are come back. simon, back to you. >> thank you very much. in the next hour of the program, we'll have more on this big move on herbalife and as gold has its worst week in six months, a gold bull will be here to attempt to stampede against the facts. cnbc on a friday morning. but i'm a busy guy. it used to be easier but now there are more choices than ever. i want to know exactly what i am investing in. i want to know exactly how much i'm paying. i want to use the same stuff the big guys use. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is,
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welcome back. the power of carl ikhan, revealing a nearly 13% stake in herbalife. we're digging deeper into the story before he joins us here on cnbc. >> apple becoming a battleground stock. we'll break down the moves and whether investors should be paying attention. >> nightmare at sea is over, but what about the lawsuits? a maritime attorney will break down what type of legal troubles carnival should prepare for. >> and gold prices breaking new some key technical levels, but we're going to start with herbalife. herb joins us now with his take.
we're going to get more information, too. >> no matter what happen, this is what i know. the under lying issues facing them do not go away. they don't go away if the company goes private. they do not go away if the company reports really good earnings next tuesday. as i pointed out in my documentary, this is an industry ripe for regulatory scrutiny. it's sort of like the wild west out there, with very little regulation and certainly very little, a lot of confusion about what the rules and laws are and by the way, when i saw ikhan's stake and his claim that he is convinced the company's business m model is legit, i flashed back to the early 2000s and minnesota
investor over a company called herbalife. it was quite a bt battle. google it. rema soft, it no longer exists. apologized to me on that one because it got a little personal. >> herb, the big battle between jacobs and ichan was over canseco. carl was short. jacobs was long and of course, canseco went bankrupt. carl ended up being correct. he said it was one of the easiest things he could do. which he said gary went was running it at the time. i know you remember it well. on that one, carl came out looking smart. nobody's tougher. >> he looks smart here, but i am not convinced no matter what he says that he's done the work. he's called the company, he gets, he feels strongly after talking to the ceo, michael johnson, that the business model is legitimate, but this takes
more than just a few talks and conversations with a company because as i've said so many times here, it's an industry and company with so many layers and there's so much to be reviewed if the regulators did get involved. >> right. of course, the key question as ackman keeps saying, they're coming, but we haven't heard from them yet. >> there are a number of things we haven't heard from yet. you mentioned boise earlier and look, the dynamics here are really great. >> the point, herb, is that ackman can be right. but he can be squeezed out of his position, be carried out on a stretcher on this trade. i'm not saying that's what's going to happen, but you can engineer a squeeze such that all the shorts will get hurt. >> when does engineering the squeeze become manipulatelative? >> i have no idea. i don't know the legal, you know -- >> everybody talks about being squeezed out and engineers a squeeze and all i keep thinking
about is how is that different than a bear raid, which i thought was allegedly illegal. >> good questions there, herb. maybe we'll get answers next hit, right? >> carnival cruise passengers are back on land. michelle caruso-cabrera is in mobile, alabama with a details. michelle, what is the take away now for shareholders? >> for shareholders are going to see just how much impact there is in terms of sales and whether or not they're going to see a decline in bookings. i think that's going to be true for the entire industry. the ship is leaving this spot. we know it's going to a dry dock area where a lot of mechanical workers and electricians who have been flown in are going to begin working on the ship. the disembarkation process starting last night about 10:15. some of the video last night, people were thrilled to finally get off the boat. let's show you the diverted route. we've built a lot of graphics so you can see what's happened
here. as these people were getting off the ship, they're going to have to go ton buses, ride to new orleans, then to galveston. the ship was supposed to return to galveston, and instead, it got diverted here to alabama. why did disembarkation take so long? there were 4,000 people on this ship. allure of the seas, 5400 can ride on that. royal caribbean has a staff of more than 2,000 people as opposed to 1,100 here. the royal caribbean ship was built in 2010, so we've seen ships get bigger and bigger and bigger. let's show you the cruise industry by the numbers. at least for now. i don't know if there's going to be an impact. they estimated there were going to be nearly 21 million people
taking a cruise this year. the vast majority of those, north americans, 17 million of them. $2.3 billion are going to be spent and why is that, are those numbers so big? because there are 167 new ships since the year 2000. so that's roughly in the last ten years. that is double. last ten years, double what they did in the previous 20 years. so, there's been a lot more capacity that's brought online and the ships are much, much bigger. back to you guys. >> you know, the most interesting thing here in the immediate hours is whether carnival lowers its prices as a preeffortive measure to keep people in them, michelle. >> i think right now is the wave season. january and february and march, this is the biggest booking season of the year for the cruise industry. this is when people book their summer cruises. when the costa concordia happened in january of last year, they immediately saw, especially first time cruisers,
decline sharply. they had to lower prices because people were nervous. we're going to see if that happens this time around. that was a much more lethal event. 32 people died. this was far less serious, but this has gotten so much coverage day after day after day. it cannot be good for carnival or the cruise industry. >> michelle, thank you. in mobile, alabama. the legal impact of the disaster will start to play out now as passengers get back home from lost wages to safety concerns, could there be a court fight on the way? james walker is a maritime lawyer and a cruise safety a advocate and joins us now. great to speak with you. >> thanks. >> as an outside observer looking at this unfold, you would think passengers would really have a great case against carnival. at the same time, there's little fine print on the tickets and i would imagine that limits the liability the cruise ships actually have. >> that's correct.
the cruise line defense lawyers had been drafting and redrafting the terms and conditions of the passenger ticket for decades. i used to be one of those mean defense lawyers and i tell you, there aren't any rights left in that contract. you don't have a right for emotional distress claims. you can't bring in action, class action type of lawsuit. the exceptions are when you suffer a physical injury. remember, there were no injuries due to the fires, thanks goodness. it doesn't sound like anyone was physically injured. you could have legal recourse if you had a physical illness, so you have this sewage on this cruise from hell experience. if you come down with legionnaires disease, hepatitis, something ending the titis diagnosed by a doctor, you may have a claim. we all watched these passengers come off the ship. they lookeded pretty good considering the circumstances. my belief is just like the last
cruise ship fire, the splender in 20106789 carnival stepped up to the plate, reimbursed the passengers. they give them a cruise voucher, assuming you want to cruise again and this time, they're throwing $500 on top of it. so that's what we've got. >> james, i'm just wondering, let's just say you are a passenger and you have an illness from the cruise. what can you hope for? trying to imagine what the worst case scenario could be for a carnival? >> well, a worst case scenario would be a few scattered cases with people suffering some type of gastro intestinal virus. but that is a final part of the cruising experience. there's something called cruise ship sickness. there were over 15 noro virus outbreaks on u.s. ports last year. very few lawsuits like that.
most of those illnesses are intense for a couple of days and that's it. >> but the bigger issue here, james, is that last time we had a big accident from this cruise line and 32 people were actually killed in circumstances where arguably at least the pilot was at fault, the deductible on the cost of the ship was 30 million. the deductible for third party insurance was 10 million. this is so well run, so well insured, shareholders surely are safe. >> sure, they're safe. there's no question about it. last year was a disaster. the concordia disaster killed 32 passengers and crew members. by the end of the year, mickey ayersen was watching the miami heat and paid himself a $90 million bonus just two months ago. carnival is a giant. an 800 pound gorilla. it has over 100 ships with with
costa, holland america line, princess, it's a massive company and this is just going to be a blip on the radar, i think. >> all right. james, it's great to speak with you. thanks for your time. >> thanks for having me. >> fascinating. >> carnival's told nbc news that one of the buses taking people to their, to new orleans broke down. another bus had to come pick those people up and continue the ride, so can you imagine what a weekend it's been for some of those passengers. the 13 f filings for hedge funds for green life capital and third point show that apple could be coming a battleground stock. hey, kayla. >> no other stock saw more hedge funds, more big money managers pitting themselves against each other than apple. it was the battleground stock of the fourth quarter. now, the company hit an all-time high on september 21st of roughly $750 per share. since then, it's been down just
about 24% and you can see that illustrated by that chart, so no surprise here that many funds sold apple in a big way contributing to that drop. dissolving its stake in apple add diz jana partners. o mega adviser sold apple shares, also dumping stakes. not everyone threw in the towel completely. tiger management trimmed its holdings, as did chase coleman. and then there were the bulls. some funds pouring money into the stock. george tsiros and david teper each doubles his stake. tsirosly adding about 100,000 shar shares. the most notable apple picker in q4 though, david einhorn. green light now owns more than $1 million in apple stock, about
1.6 million shares. he was the largest net buyer in the fourth quarter and the it was roughly 275,000 call options contributing to that stake. about $145 million worth of call options there, so obviously, he thinks the stock is going in one direction only. back over to you. >> so, net, net, the news flow is positive? >> net net, it's about equal. there are just about as many sellers as buyer for the quarter. lot of big names here. it will be interesting to watch. >> thank you very much. ahead on the program, cyber hacking. it's not just for computers. we've got the results of a new survey that should put all mobile users on edge. plus, look out lulu lemon, under armor opening a new store and it is targeting women. an exclusive interview with the ceo coming up on cnbc. ♪
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the obama administration saying the greatest threat to businesses could be cyber attacks. eamon javers has the latest from washington, d.c. >> good morning, melissa. i'm here outside the center for strategic studies in downtown washington where some of the top security experts are briefing industry trade and think tank folks here on what the rollout is going to be on the president's executive order that he announced on cybersecurity at the state of the union earlier in the week.
the white house's top cyber guru talked about the scope and scale of these attacks. >> the threat is becoming more sophisticated and it's becoming more dangerous. we're moving up the threat spectrum from simply the internet equivalent of graffiti up to what you see what happened to saudi aramco with actual destructive impact. >> and what he's talking about there in that attack, officials said it was a month's long attack on the saudi arabian oil company designed to cut off oil production and sale, that hackers might have ability to do that. now, experts think that was a state sponsored attack, but nobody is naming the country that might have been involved e behind that attack. the sense is here is that these administration officials are eager to avoid using the word,
regulation. they want to say stabd dards. they want to talk about a framework, cooperating with the private sector. they don't want to give companies this is the impression this is going to be mandated from the top down. they want companies to buy into this effort to kind of coordinate all of the u.s. federal cybersecurity under one umbrella, but not to mandate anything. they think companies might be resistant to that. >> it's david. there are a number of threats here. you were talking about the threat of cyber attacks in terms of the infrastructure of our country. we've also reported a lot on espionage of corporations, but you point out this unwillingness to share information, concerns about the privacy of these companies. how far along is the administration in making enroads on that with its latest initiati initiative? >> well, one of the issues they raised here is just the basic data gathering. they said companies can't really
get insurance yet on cybersecurity threats because there's no data for insurance companies to figure out how often they happen and how to price that insurance product. they're u talking about getting that data out and allowing the government to tell companies what it knows about how often these attacks are happening and then companies can start in the private sector free market kind of a way, respond and insurance is just one of the ways they would do it. >> this is a bigger issue here than under the present law. companies are exempt from the fallout of a major cyber attack because it would be considered effectively an act of war. don't you need to change that so that the company has liability and therefore, there is a cost benefit in them investing in it nor heavily? >> actually, what they're talking about here is proposing legislation that congress would have to work on that would give companies more limited liabilities here in the case of cyber attacks and that way, they'd be more willing to come forward and cooperate with the
government. a lot of this is about the government encouraging companies to come out of the shadows and talk to them about what's happening. a lot of companies don't want to admit the degree to which they're vulnerable. >> yeah. fascinating stuff. appreciate that. and keeping on that subject, turns out one of the prime targets of cyber attacks, largely mobile devices and e commerce. >> we know hackers are increasingly active around have turned professional. they're redefining organized crime. numbers out from trust wave give a glimpse at how the company's evolving. one, retail stores where the target of choice in 2012. two, attacks on smart phones were up 400%. so, retail breaches were up 15% among the trust wave track. urban legend says banks because
where the money is. hackers rob stores for the same reason and because banks have better data security. three years ago, hotels were harder hit and there are more credit card numbers to steal at stores. a lot of the stores are so unprepared, it took a majority more than three months. on to phones, one attack involves tricking users into downloading a fake version of an a prk p. there are others that focus on sucking the contact information out of a phone. security experts i talked to say this is just the beginning of a new waef of emotional attacks and just to put a number on this, about $12.5 billion in estimated losses in 2011 from hacking. about 171 million just from a sony hack we remember. >> john, when people ask you, should i do mobile banking, should i subscribe to wireless at a hotel room, what do you tell them? >> the wireless at a hotel room,
i like to bring along a my-fy or something like that. ths a bit more secure and you've got to be careful surfing around on these e maersk sites. not so much your amazons and ebays. use a service like paypal on those. it's a bit more secure. >> you've got a lot of skeptical anchors over here. >> two anchor haves have done documentaries. public wi-fi, you should not be on it. >> no public wi-fi. >> right. sorry to cut you off. i have former senior guys at the fbi, not going to say who they are, off camera, say the camera man said would you do online banking and he said, no. >> we set up, we spent $50 at best buy. set up a laptop and antenna in times square where there's public wi-fi and we were able to term just the activity around us, we could see somebody was changing their status on
facebook. somebody was checking their online banking account. that's what happens when you use a public wi-fi. >> google picked that up by accident. with their street view trucks. you could just drive by and pick that stuff up. >> with every convenience comes risk. thanks a lot. carnival likely to face a wave of lawsuits following its disaster. while the ceo has yet to come out publicly to comment on this nightmare, so how will investors and consumers begin to trust once again? best bond manager on the street lays out his take on the great rotation. back in two. revolutionizing an industry can be a tough act to follow, but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%...
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years ago. also, analysts at deutsche bank no longer fans. they cut are rig to sale, cut, costs are risening, target price remains 49 bucks. >> thank you very much. global currency wars are front and center as the g-20 ministers wrap up their meeting in moscow. word is, the communique will not single out japan and that's a green light for more of that yen crushing shorting you have from the hedge funds. kathy joins me from bk asset management. >> i think short yen trade is still alive. you've seen the u move in dollar yen today. the fact they did not single out japan, which no, we didn't think they were going to because basically be like hypocrites doing so. as well as you can argue for the british, many other countries, so the point is, a short yen trade is still alive and kicking. there is opportunity there, but
i think next week, the focus will be ton the euro. we've got the ur ozone, a commission forecast. i think you're seeing a bounce in the euro dollar here. the draft statement giving an all clear, but i think next week will be more. >> it's euro story that you're in on. >> right now, i'm short euros through euro sterling, but i think the opportunity next week is also in the euro dollar and the reason for that is there's a lot of anxiety and uncertainty. that all comes to a head next week because the european commission forecast could give some red flags about those budget levels, so the level i'm basically looking at, is is looking to short the euro dollar at a breakable low at 132.80 with a stop at 133.90 and a
target of 130.80. it's a short on weakness because the euro dollar is bouncing. >> are you ready for the weekend? >> final communique coming out. >> and don't forget money in motion tonight as well. melissa, tonight of course is the "money in motion" extravaganza. >> still to come, the ceo of ca canter fitzgerald joins us live to weigh in on the future of big banks and state of commercial real estate and later, an exclusive with underer armor's ceo. he will explain the company's new plan for growth. stay with us. i'm glad we got cdw and cisco to design our data center.
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the ceo issued an apology last night. here's what he had to say. >> i know the conditions on board were very poor. i know it was very difficult and i want to apologize again for subjecting our guests to that. we pride ourselves in providing our guests with a great vacation experience and clearly, we fa failed in this case. >> question now is what does carnival need to do to restore confidence? cindy is a management -- author of "think again, why good leaders make bad decisions" and alan adamson. people are are looking at cahill, have they done enough? you say the that crisis management is not their strong suit. >> this is a situation where you could have a much bigger pr disaster than this. everything went wrong and for mickey, the owner or rather the
chairman and ceo of all carnival corporation, he's been seen at miami, he's an owner of that team. it didn't look good. little reminiscent of tony hayward back on the yacht when bp was going through their oil spill. it looks like a disaster. could they be doing more? do you want a discount on the next carnival cruise line after going through something like this? i think there is more that could be done. for the brand, for the company. >> right. so they're doing words now, allen. you want to see actions. what do you do? bigger refunds? change your protocall? >> it's a really challenging situation because on one hand, you have 4,000 unhappy passengers. online, complaining and the other side, you have a ceo saying i'm sorry, a brand is as a brand does. until the actions happen, it's a difficult situation. >> what would be one prescription in terms of action. >> you have to do more than they expect. something that gets them to say
hey, not only did they do this, but i got a personal call from the ceo and he personally apologized to me. >> this is going to sound awful, but does it matter if people continue to book cruises, does it matter what the company does? if there is no impact and there aren't many lawsuit at the end of the day, does the company have to do more than what is expected? >> well, i think you have to do more than what's expecting ine. the fact the cruise business is doing well now doesn't guarantee that's the case. they're going to remember the costa concordia, other problems with it and carnival and they're going to start to wonder. once people start to wonder, especially in a world of social media with twitter and facebook and everything else, is there a problem that's deeper than this one situation? is this a one up or is there something more fundamental here. >> there was a fire on the ship and the fire extinguishers put the fire out. stuff happens.
why is this a huge pr disaster. what were they supposed to do? try to get those 4,000 people off at high seas? has the company done anything negligent or an act of god for which it is well insured. >> they weren't exactly getting back to shore quickly. they were going with these tug boats, what have they were stuck in the middle of the ocean and it would have taken weeks and not days. maybe they should have gotten people off. figured out a way to bring another carnival ship there. thai they've got those little ferries that bring them to shore. >> with respect, you're not a maritime officer, you have to trust to an extent, what the experts, the people that have sailed those ships for years and run 100 ships in a fleet do. >> if you were stuck on this thing, you wouldn't want to go through that situation, but there's one other thing they could do and i think this is
more important and more forward looking and that is launch an investigation with third parties where they're bringing people in to understand and evaluate the safety culture within this organization. we saw that at bp as a disaster. we don't know if that's problem. but as customers, we'd want to know and i think for the overall good of the corporation, people want to know, is there something fund men tli wrong? i'm wondering about that and i bet a lot of other people are wondering. >> alan, what do you suggest they think? this is a very public fiasco, if you will. if they knew were not working properly, i haven't heard nearly as much focus on that company. >> very visible event in a relatively slow news time. with a lot of people who are upset and often in a situation people can relate to. i think they can learn from the timeline. do more, actions change
something. so, i think the next time somebody gets op a carnival cruise, something's got to be different. >> what would you suggest? >> a tour of the engine room. something that shows people they have made as just talked about. cultural changes, process changes. because these things are going to happen. the trick is how do you manage it in the long-term. >> from now on when adds for not just carnival, but all of the players in the industry air on tv, is it going to be, are they going to emphasize safety as opposed to the food and the dancing? >> you know, in my experience with the cruise industry, the best cruise lines are always emphasizes safety. you've got to do that. the it's number one thing. of course, you're out there having a good time and people understand that. there's really two things. one, you can't prevent every accident, incident, but you've got to do something about it once it happens. where people feel like it won't again. >> interesting.
we'll see what the fallout is. thanks for your time. markets heading flat into the weekend. let's get an update back at hq. >> actually, i'm here at the nasdaq and giving you an update on what they're looking to do in term of their pretrading, their electronic session. they were looking to expand that. we're going to roll the clock back to 4:00 a.m. to compete with the euro nets. they're saying this is part of their strategy. with the goal of addi adding liquidity to the marketplace. they say this is going to impact the international investor. in the early hours, the trading volumes are light. that's compared to 35 million shares at the nyse and on average, during the regular session, we're talking about 988
million shares in february. so a very, very small piece here. what they're looking to do is expand and be more competitive. analysts saying it's not going going to impact the bottom line, but i want to highlight this is on a day when the nasdaq is hitting fresh, 12-year highs. we're watching the biggest retailer in the world. it is moving lower today. josh? >> the growing horse meat scandal now catching up with walmart. saying horse dna found in products they sold as beef. companies like compass, the world's biggest catering firm, britain's biggest hotel group. shoppers not happy. walmart's british supermarket armt saying it discovered horse dna in its beef boll naz sauce, which i'm guessing gave consumers a flavor they weren't expegting. >> thank you very much. and on the program, some
major -- ahead on the program, some major hedge fund players. >> horse -- >> horse meat is not dangerous, it's some of the drugs horses take. any way, sorry. >> talk about gold next. gold had its worse week, down 3% in six months and the smart money flowing in. and later, underer armor taking aim at lulu lemon. how will the new push fare? we'll be joined by the ceo from the new store in baltimore. mine was earned in djibouti, africa, 2004. the battle of bataan, 1942. [ all ] fort benning, georgia, in 1999.
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welcome back. gold prices just fell below $1600 an ounce. they've been falling steadily all night, all morning as it appears there's a clearing debt here in the precious metals market. we're looking at prices that fell below that 16.25 level and continued to fall and there are a number of factors. demand for gold fell 4% versus the previous year. al also, reports coming out of the sec showing hedge fund managers cut their positions in gold etfs. a continued fall could send prices to 15.75 an ounce. that's what traders are looking at and they're going to be watching the meetings over the weekend to see if there's anything about currency wars that impacts the gold market. keep your eye on oil prices. as well because heavy technical selling there as brent crude has broken below $116.80 an ounce and for wfi future, we're
holding above $95 a barrel, but still down about $2. that is going to be a key level in a line in the sand there for oil prices, simon, and a dip below there traders are saying, look for 90 bucks. >> so, as far as gold is concerned, down over 3% for the week? >> yes, we are down. we're seeing one of the biggest weekly drops we've seen since probably june. >> sharon, thank you very much. the view there from the nymex. let' bring in frank holmes at u.s. global investors. frank, what do you think about gold now? >> well, i think that gold should always be a 5% weighing and gold stocks another 5% for a total of 10% in someone's portfolio and what we're seeing now in gold over the past ten years on a rolling 12-month basis, we're down almost two standard defuations. that was almost in may of last year when i was on the program with you. we saw gold rally $200 from that
level. this has only happened 2% of the time in the last ten years, so there's a 95% probability of gold to rise and that could be a 15% rise. >> but markets don't go in one direction, so it may be they've turned they clearly believe gold may not be the place to be. >> well, come on, simon, in yen terms, gold had a spectacular run. gold is is the currency and that's why you're seeing central banks for the first time in 50 years with a central level. >> it's not currency. gold is only a currency if you're bullish on it. gold is actually an asset and people may not diversify into it necessarily. >> that's your opinion. >> it is. >> and i'll stick with it. >> at the same time, frank, i'm wondering because we had a report out from the world gold
council. while you say central banks are using it as currency, demand for gold went down in 2012. i'm wondering how you layer that. >> what we did see in the first six months of last year was a slowdown in gdp of china. predom atlanta flaipt because of the slowdown in europe and we saw that taking place with i guess taxes coming out of india. that starts to change and we had a record increase in the fourth quarter of last year. overall, the demand was down about 4%. the gdps for india and china are rising again, so i think that's a more bullish statement. >> okay. we'll leave it there. thank you. we've got the man barens named the top bond manager of
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welcome back to "sesame street." friday, don't you love fridays in front of three day weekends. this is the friday rendition of the santelli exchange. exports. right now our numbers to some extent are getting better. i like the utilization rate. consumer confidence bounced back. it's not in the 80s but university of michigan sentiment for february was a solid number. even though i always say that i don't like being happy what was considered european style growth rates here in the u.s. right now even though europe's growth rates are much less, we can do better. but there's one area in particular that i think we need to pay more attention to and i would like to thank steve liesman for helping me think and work through these numbers. if you look at the slowing we see in europe in particular, many accurately say, well
exports, in total in our economy is less than 10% of gdp. a slowing global picture isn't going to be a huge ding for the u.s. but they are wrong. okay. because, think about it. what's considered an export of a good or a service? it's something made within the borders or our country that we ship out. that's not the same as overseas corporate profits. okay. think about company x, y, z. instead of exporting they move, open up a business in another country, set up shop and start selling things. that is not considered an export. we're using round figures here. so if exports are slightly less than 10% of our gdp, and exports contribute roughly $2 trillion to our economy, overseas sales are twice that amount. so, if we see international slowing it's a whole lot more at
stake that negatively impacts the u.s. economy than the less than 10% number. because international sales are going to shrink, and that is a big contributor twice in terms of what export dollars are. think about some of the international companies. coca-cola, okcaterpillar, ford, gm, their european numbers are starting to slow but yet their numbers are pretty good. that's potentially going to catch up with us. the one good thing on the export side is maybe the most orphaned of all exports and there's a boat load written on it, it's natural gas, maybe liquified natural it was for exports. i don't want to get into the politics of whether we should or shouldn't do it but we're blessed to have found technology that's pretty darn clean by green standards. the government is not pushing
this. it's almost growing despite the government. but all of these issues on export, repatriation, total international sales all need to be eevaluated more closely in a slowly global environment because we could get dinged a lot more. back to you. rick, thanks so much. >> let's get a check on shares. nasdaq ipo soaring in today's first day of trading. this priced above the range of $16. this is a money transfer company that enables people in the united states to transfer money on web based pcs and mobile phones internationally. direct compete engineer is western union which is also higher by 1%. when we come back, karl icahn putting new life in his
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tiffany and costco. the iconic jeweller filed a lawsuit alleging the whole seater is selling counterfeit diamond engagement rings bear the tiffany name. tiffany only became aware of it in november of 2012 after a consumer in california alerted the company in frustration. however, costco was not and is not using tiffany trade marks or wording on its engagement rings for sale online. the lawsuit is claiming trademark infringement, unfair competition and false advertising. lawsuit is asking costco forfeit profit from the ring sales plus $2 million per infringemen in damages. tiffany believes hundreds innot thousands of consumers bought what they thought was typical
tiffany behavior. luxury retailers are quick to file lawsuits when products are immitated. retailers believe knock off degrade the image. costco shares were lower initially but have turned slightly higher. we reached out to costco for comment but the retailer is on the west coast so they may not be in the office just yet. >> i was just thinking they've had issues with levis, coke, apple over the course of the years because they are not afraid to go out the third-party vendors and secure those brands. >> interesting strategy to say the least. >> thanks. we'll see you tonight. see you in a few minutes. talk g-20 and g7. here's what you missed earlier on if you're just joining us. welcome to hour three of "sesame street." here's what's happening so far. >> scott, got more insight into
what's been happening with herbalife. >> we invest based on a careful analysis of the facts after 18 months of due diligence we concluded it's with certainty that herbalife is a pyramid scheme. >> you'll see valuations of stocks that's a good value to get into. not big deals but middle to smaller size deals. >> power shift. a lot bigger in some ways. his poker face is better. i just think the question here is will there be a short squeeze. >> we did reference to slight moderation in sales because we think overall little bit more uncertainty in the economy. but our big growth story is intact. we're bullish on secular trends. >> if you come down with legi
legionnaire's die disease, something diagnosed by a doctor you may have a claim. these passengers coming off the ship looked pretty good considering the circumstances. >> good friday morning. we're live at the new york stock exchange. check on the markets as we close out a week that's had a lot of news. dow is up 18 points. s&p is up almost one and a half. notion up three and a half. kraft food says fourth quarter revenue likely to decline. consumer name raising its full year 2013 earnings outlook. burger king beat the street estimates on the top and bottom lines for the fourth quarter. comp store sales up 3.2% for 2012. a number that far out paces what mcdonald's has been doing. billionaire hedge funder karl icahn disclosure of a sizable
stake in herbalife sends the stock soaring. icahn joining scott wapner in an hour's time. we'll take a closer look at unusual trading activity around heinz before buffet revealed his purchase of the company. we want to get back to the big news. shares of herbalife after karl icahn disclosed that stake. putting icatn at odds with bill ackman. scott wapner with talk with karl icahn. >> certainly interesting, carl. the battle between karl icahn and bill ackman take a stunning turn. icahn now owns 14 million shares in the company, 13% position with the investment through
traditional stock and options as well. icahn telling me last night he's done a lot of work on the company, has a good business model and spoke to the ceo several times and thinks he's doing a great job. icahn told me he thinks bill ackman is off base with everything he's been saying about the company. ackman has called it a pyramid scheme and this new disclosure comes after two men brawled on the halftime show three weeks ago today. >> i'm telling you he's like the cry baby in the schoolyard. i went to a tough school in queens that used to beat up the little jewish boys and he was like one of these little jewish boys crying that the world was taking advantage of him. he's almost sobbing. he's in my office talking about how i can help him. you know, it's like in the old song, i rue the day i ever met the guy. >> ackman telling me telling me he's unaffected. his goal all along was to shine
a spotlight on herbalife and to the extent mr. icahn is helping us achieve that we welcome his involvement. karl icahn will be with me on cnbc on the halftime show around noon. carl, it's going to be interesting. >> it is. some traders today -- i mean the term going medieval on ackman has been tossed around. the old saying -- if ackman is right, saying the market can remain irrational longer than you can remain liquid comes to mind. >> karl icahn has a lot of liquid. is this business, personal, a combination of both? i'm sure karl icahn will say when we speak to him later he's in it for a money. he's a business guy. he likes to win. he likes to make money. you got to believe that given
the timing of all this the personal nature of their brawl over a decades' time that festered now to the surface karl will remain an awfully big story. >> last time he was on with you, the words are still incorporating in my head, oil never go on another show with you again you got him back somehow. >> cupid struck last night, valentine's day. the timing was right. he agreed to come back. we're grateful for that. >> yes. can't wait for it, scott. see you at the top of the hour. great show. meantime some new details on the american airlines/u.s. air deal and what tom horton stands to gain. phil lebeau has more. >> reporter: yesterday at this time we were at a press conference. doug parker will be the new ceo of the new american airlines. that will happen once the merger is completed. what was that made mr. horton say i can step aside i don't
have to run the joint airline? he's getting a lot of money. in fact tom horton will be getting $18.75 million after amr exits chapter 11 bankruptcy protection. that will be split between cash and stock 50/50. he'll get lifetime flight and travel benefits with the new amr. he will be chairman of the board when this airline exits bankruptcy and there's mr. horton introducing doug parker yesterday at the press conference in dallas. he will be chairman of the board of the new amr but only through the first annual meeting which is expected to happen in the spring or summer of 2014 and then he's out of the company. carl, the bottom line is tom horton steering the company through bankruptcy and through this merger will get $19.87 and then he's adios, away from the company. >> i wonder what union members will say about that. from the skies to the sea let's
head no bill, alabama where the disabled carnival ship finally docked last night. michelle caruso-cabrera is on location to tell us what's happening. hey, michelle. >> reporter: carnival cruise lines confirming to reporters that one of the buses that they hired to move passengers from mobile to new orleans broke down on the way and they had some stranded passengers until they got a new motor coach. they had to hire 100 of them to move the passengers. they didn't want them to spend the night in mobile. the last update, they moved the ship. we're now over in the dry dock area where the repairs are going to begin. this is the shipyard where they will do a lot of work on the ship to try to get it back float. we assume they cancelled 14 cruises thus far. let's see if there will be any more beyond that. one of the reasons that cnbc is covering this not just because
carnival has publicly traded but cruise is a huge business. if i show you some numbers. the number of people in north america taking cruises back in 2008 was only 7.2 million. in 2013 they expect that to be 17.6 million. that is more than double in five years. north americans, in other words americans and canadians are the vast majority of cruisers because it's going be 17.6 million north americans out of the 20 million people in the world who take a cruise. why are there so many more? there's a whole lot more ships. consider this. in the 1980s they only built 40 new ships. in the 1990s they built 80 new ships. from 2000 to 2013 they built 167 new ships. where are most of them going? like the triumph here, most going the caribbean. we built a graphic so we can show you the most popular destinations. gulf of mexico, caribbean area that's where you get the
majority of the share. people can take a quick trip if you're coming from different ports like galveston or new orleans. the question is the fiasco that was the triumph what does it do the growth? >> thanks so much. we'll talk to you soon. when we come back he beat out the bond gurus at pimco and double line capital to be named the best bond fund manager the year. he'll join us live next. but first rick santelli is working on something for the next hour. hey, rick? >> hi, carl. definitely. yesterday we had some tough technical difficulties. we're bringing back matt fabian of municipal market advisors to talk about munis. are they a good investment? what about california, illinois munis. what about the sequester. we'll answer these questions at the bottom of the hour. in america today we're running out of a vital resource we need
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cam -- let's talk about some of the things we're seeing in stocks through the eyes of the bond market. >> absolutely. dave good to see you. not just the number one bond manager family fund last year but two of the last three years. congratulations on that. let's talk about 2012. how did you drive that performance in what was a somewhat difficult credit market
for a lot of bond managers? >> you know what, i think one of the unique attributes of our strategy and style is our size. we're 7 billion in our flagship product. so we can play in a lot of the sectors where the pimcos, the black rocks play. our largest overweighting hands down was in the corporate arena. we were overweight financials in investment grade corp operates. overweight single b and double be. bank loans. we're starting to do an active rotation out of high yield. >> the rotation, everybody comes on the air, as you know, and says we're in a bond bubble. you're a bone manager. you have to put bond capital to work every day. number one is this a bond bubble. when you look at the correlations things what interest rates are versus the s&p what does the world look like to you today 2013? >> really good question.
if you look at interest rates in general which is the single biggest risk to the bond market, if you look at the fed with no exit strategy that says to me people anticipate the fed to get out of the market sooner rather than later it ultimately creates inflation what does that do? it's an asymmetric risk to the bond curve. what you want to do in that case is be short in duration. a bond manager like myself would recommend some multisector products that generate a very attractive yelled. bar bell what the your equity strategy. it's a great way to play the market. gary, you had mentioned the last time we were at these type of evaluations on the s&p 500, the monetary treasury was 4.5%. if we get the perfect storm in the next 12 months, pick up in gdp, recovery in the housing market, no exit strategy for fed over the next 12 months the ten year treasury goes 4.5%.
that's a 23-point hit. for the average investor that's a dramatic loss opportunity costs. >> would you expect an exit strategy if people agree that they don't have one yet for that to be developed over time over the next year >> carl, i think the thing that's on the fed's agenda is not to have massive asset price devaluation. they are very cognizant of putting assets at risk. >> walk through did i buy your bond fund or a bond fund today and ten year goes from 2% to 4.5% and you are a great active bond manager, is there a way -- am i going to lose money in that bond fund no matter what or can you strategize to make money in a bond funding that environment >> inflationary environment with higher growth so you want to be in some of the hybrid sectors. stay out of treasuries. stay out of the mild rotation which we're seeing in retail. you want to stay out of high dollar priced allow coupon
corporates. high yield, bank loans which actually will adjust upward with a move in the front part of the curve which will be tied to libor. you want to be active in the foreign markets those that have no relationship to the u.s. move in rates. local currencies where we're starting to see rotation right now in the foreign market which we think have tremendous value. you can pick up large incremental yield. we did one in chile. a solid company, double b, 6.5% yield. you can't get that in the u.s. >> what does the inflation picture say about gold, six month low? >> carl, right now there is no inflation but ultimately if we start to see the bond vigilantes get on that side of the trade, fed has no exit strategy, pick up in gdp, inflation will be on the rise. >> gold will pick up? >> i believe so. >> you talked about the fact you're nimble.
you say you can be opportunistic. what's the optimal size. are you at a size where you can create this performance. if you get bigger because you can't? >> absolutely. i would say right now in the space of 7.5 billion we have opportunities in asset backs. we did franchise royalty deals, dunkin' donuts, domino's pizza. somebody who is 30 to even 100 billion in assets or more cannot play in that type of space. >> thanks, dave for joining us. >> always good to be reminded sometimes small and mid-capsize is better. >> thanks guys. i want to check out shares of zoom. opening for trade. up over 39%. ticker is xoom. as you can see up. one retailer is on the move. vf corps enjoyed a pop.
fourth quarter earnings jumping 30%. softer than expected. 2013 guidance on this one. analysts said could it be dos due to its timberline acquisition. vfc is a 10% growth company. investors setting this one up about 3% right now. carl, back to you. >> north face back to double digit comps which was a good sign. when we come back after the break we'll go inside under armor's new concept store in baltimore, maryland as it looks to cater to women. under armour ceo joins us live when we come right back.
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square feet. not your first store but a standalone outside of the malls. what your trying to get out of this? >> first of all it's a brand expression. this is a lab store. we'll learn a lot. this is the type of store that we typically you put in a warehouse somewhere. here in our town we need the retail present jays. first and foremost it gives us a chance to accentuate products. you mentioned women. women is a huge part of the story that we don't get a lot of credit for. we have a wholesale business. that's $800 million at retail. you look at that story. you'll see the theme throughout the store, putting the collection together. putting the whole thing head to toe. i emphasize toe with the beautiful footwear section. >> the store is split down the middle with women on one side and men attorney and some youth
stuff too. lululemon is just around the corner. you had a top executive leave. here you have more pairs of under armour shoe than you'll see anywhere in the world. it is more difficult for you to get traction in that space >> footwear anchors this store. footwear will anchor our company. our long term vision is women's apparel business will be larger than our men's. we're so new to this, we're seven years into footwear. in that time you look at our first product we launched was football cleats and then baseball cleats, training shoerks running shoes, basketball shoes. we have a product called the highlight cleat, a $135 football cleat that elevated us to a market share. you look at that, we've been at it seven years.
imagine we're number three in running shoes. imagine in year seven. that commitment is to showcase our footwear and let people see a bigger explosion of our product. >> it took michael jordan to make nike a global business. >> athletes play a part. that's authenticity. there's no one bigger than the brand. i don't envision a scenario where that actually happens. our products should be leading. our story telling. this week we launched something called armour 39. it tells an athlete how they are doing when they work out in lieu of the size or sweat stain on their gray t-shirt saying wow i feel i had a good exercise versus generating a will power score. what we're delivering to athletes is more than just buy this product. we're having the athlete come to us i want to wear your brand. that to us is much more than we pay more money than brand x, y
or z. >> this new i will campaign, the old campaign was physical, aggressive, a lot of colors in here. we already talked about the female component. when you sell overseas, in the u.s. you have a lot of stores within stores and you go that route. could this store be a template you can make that huge push outside of the u.s. right now 6% of your sales are outside of north america. >> that's what we're missing right now is that global footprint. we're fortunate to have unbelievable sporting partners. theb y when you look at that we build a great presence here and there's places still where we believe number one i want to demonstrate for our accounts what our presentation can look like, how great we can look in their stores. that's part of the service in addition to helping us explain to the consumer look at the breadth of under armour. we opened four stores in china and developing what that
footprint is, four will turn into 14, turn into 40 very soon. we want to make sure we understand the merchandising components. >> thank you very much. kevin plank, founder and ceo of under armour. coming up on "closing bell" we'll do some comparison with nike in terms of stock, revenue and growth. >> few moments left in europe's trading day. don't forget 30 minutes away. scott wapner sitting down with karl icahn at the top of the hour. back in a couple of minutes. when they tell you that you need your oil changed you got to bring it in. if your tires need to be rotated, you have to get that done as well. jackie, tell me why somebody should bring they're car here to the ford dealership for service instead of any one of those other places out there. they are going to take care of my car because this is where it came from. price is right no problem, they make you feel like you're a family. get a synthetic blend oil change, tire rotation and much more, $29.95 after $10.00 rebate. if you take care of your car your car will take care of you.
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europe putting their trading week to bed. nothing like a g-20 summit kicking off with a crashing meteor. >> it is on the back skrins at the policy level. those devastating gdp figures for the fourth quarter. we learned about the degree to which exports were crushed externally and internally a lot of discussion for at what point the euro and ecb get dragged into that conversation. >> the european markets are closing now. bright green. spain stands out as being in negative territory and falling. just on the detail that we got on the exports, annualized rate
in the fourth quarter exports externally for the year fell by 6.1%. and within the eurozone annualized rate of 11% that's the degree of crushing of certain parts of business that you're having there. meantime in moscow it's the g-20. will the euro be dragged into those currency wars. the big news coming out of that meeting of finance ministers is that they are not in their com mumpb nique. they will go back to china. crushing the yen. what a trade. the short yen has been for so many hedge fund managers and this was highlighted in the press on both sides of the atlantic. check out these charts. this is a year chart. look at the gains you've made on the euro or the dollar against the yen. 22%, 19%. these are wig moves. you don't get major currencies moving this way.
but we had it at the end of last year and coming into this. a couple of individual stock stories. the luxury retailer in france that's run by the younger pinot billionaire. they will turn the sports brand around. stock is up almost 8%. one more stock, bankia. for ordinary shareholders the ipo by the spanish government at three euro 75. speculation is that when they recapitalize and dilute those thousands of ordinary shareholders it could only be
worth one euro cent. that's a huge scandal in spain because so many investors were whipped around the hype. europe will trade on monday as we sit back and enjoy our long weekend which is good because as you know those dogged europeans don't work hard enough. they have far too many public holidays. >> they have it so easy. let's turn our attention to financials. bgc say volume in financial markets is rebounding. i want to bring in the chairman and executive officer with bgc. good morning. you said that the last three quarters in terms of volume of last year below what anyone would consider ordinary but looks like -- i'm guessing this year has to have changed year-to-date. >> so far this year was great. last year's first quarter was
good. second quarter all of a sudden all the bears went into hibernation. nobody was trading. volumes were terrible. our stock went down as volumes were never going to couple. look at what you were just talking about. currency wars. volume picking up. people worried about tint rates. economy in europe is garbage. these are all great stories for volumes. volume is picking up nicely up s 10% in january. i think our company which just trades on volume doesn't take risk about direction because volume will have one of its best years ever. think about this. our dividend 11%. makes no sense. >> i mean is the year getting top heavy in terms of the early quarters, howard, or can we sustain this for say the next nine months? >> think volume -- really feel sort of ordinary again. this is not exciting times but once you start saying currency wars.
think about this. japan actually go out and say we got to finally do something about our economy and we're going take the yen down which helps their economy. then we have our, you know, potential treasury secretary saying he loves the dollar going higher. these are great stories for volume. by the way that makes no sense. why would the u.s. treasury secretary want the dollar to go higher and hurt our economy in that way. i don't get it. >> i wonder, those as an offset, when you look at the banks and you look at higher capital requirements and lower roes and regulatory head winds and elizabeth warren, is that a positive for you or not >> banks are going to trade less over the time. banks with low interest rates are making a bundle. your deposit, my deposits are in the bank with no interest rate. that's good for the banks. what you'll see these traders going to hedge funds. other kind of firms. you know, they are going to do
business. high frequency trading firms, these kind of firms will do better and better and better and you're going see volumes maybe be a little more democratic, big banks do great and make great money. but i think the democratic nature of trading will spread it all out and that's going great for business. >> you had some comments recently on the fiscal cliff on the way congress is appearing to settle into a new way of doing work, leaping from crisis to crisis spapt big risk? >> it's got to be. the world is different today. you got the republicans in the house and those republicans were elected to control the house the same day that president obama was elected to control the white house. and they are going to cross their arms and they are not going to let him raise any more taxes unless he dramatically cuts spending. he made it crystal clear in everything he said he won't dramatically cut spending and off we go on a real fiscal
cliff. what the republicans did which i thought was very smart is they pushed it out. they didn't want to have that fight which would have been like today. all right we'll have the fight in three months. let's get back together in three months. may 4th there's a new cliff. >> yeah. believe me we'll be leading up to that in a big way. we'll continue to watch your stock, howard. hope you come back. let's bring in pisani. what's moving on the big board. >> howard is usually excited about things. he should be excited about the u.s. stock market. i want to show you what's going on here. we're far and away outperforming the rest of the world for the month of february. s&p 500 up 1.6% so far for the move february. brazil is down almost 3%. mexico is down almost 3%. look at these numbers. we're outperforming everybody. nobody is close to us. what's going on? there's a lot of cross currents going on. first europe is mired in a
recession. brazil, strong currencies had a problem, that's hurting their economies overall. i'll put it simply u.s. economy is outperforming. i'm not saying it's great. but on a relative basis we're outperforming the rest of the world here. the bottom line here is right now money is favoring u.s. equities in february. that's all you need to know and that's the bottom line. let's move on here. i want to show you the effect it's having on some of the other commodities. look what's been going on with gold. since we body in november this is what's been going on and in gold. almost exact mirror images. they are using gold as a source of funds to buy the stock market. this isn't always the case. but it's been very, very clear since november, even more clear as we're seeing it happen today. i want to move on here and talk about two new etfs in the market mirror some of the fashions. low volatility etfs, power
shares has an s&p mid-cap that is very interesting. it's basically low volatility stocks in the s&p mid cap and small cap. the bottom 20%. why? why is anybody want these kind of low volatility etfs? because they had modest success. this is the s&p 500 low volatility, etf. the 100 lowest volatility stocks in the s&p 500. why? you're going to get defensive names. consumer staples. utilities. this has been fairly popular recently in moving up. now the reason, just take a look. at times of high volatility when the market goes crazy this tends to outperform. remember the market dropped big in may. the s&p dropped. but this index held up pretty well. market dropped down here, october and november and this, this held up pretty well here and that's the white one that you want to look at here the power shares. slight outperforming.
high volatility when the stock market goes down, carl, these kinds of etfs, low volatility etfs outperform. it's a sign of the terms. people want to avoid volatility at all times and maybe here's something that would appeal to some of those people. >> very nice. thanks, bob. still ahead the latest on the s.e.c.'s review of the options trading surrounding heintz ahead of the buffet deal. less than half an hour to go before karl icahn joins scott wapner live on the halftime. you don't want to miss that. like an available heads-up display on the 2013 lexus gs. there's no going back. on the 2013 lexus gs. investor. yeah, ibut i'm a busy guy.or it used to be easier but now there are more choices than ever. i want to know exactly what i am investing in. i want to know exactly how much i'm paying. i want to use the same stuff the big guys use.
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e-trade. less for us. more for you. coming up on halftime billionaire investor karl icahn is back after taking a big position in herbalife. the clash of the titans continue. week's deal making a sign the market will take off? bill ackman takes a stake in burger king. is mcdonald's the better buy. two traders, a heated debate at the top of the hour. >> our traders getting their popcorn ready. sticking with the herbalife theme. gary kaminsky has some thoughts. >> don't know anything about herbalife fundamentals. leapt me tell you what i do know. we checked with three of the
four biggest prime brokers. one said they had no stock to brother. another said they have small odd lots. another said we think there's only 2 million shares on the street to borrow. why is this important? i know something about a short squeeze. i want to bring up a chart of a company hamburger hamlet. this is a company that became public. big west coast chain. here's what happened in that short squeeze in the early part of 1992 when the stock doubled. it went from 10 to 20. the fundamentals were deteriorating. this is a company that eventually filed bankruptcy. it was an overleveraged private company. we got bought in and thought we had stock short, we had a good length and on the wrong side of it. let me tell you this. when you're on the wrong side of a short and get bought in it doesn't matter what fundamentals are.
the final thing i want to say, we were down to 21 a couple of weeks ago. we spoke to a lot of people on icahn and his involvement. the idea is dumb and stupid if people think karl is doing this as a personal vendetta. he's not doing this and scott will ask him this, this is about making money because that's all karl that does and that's all that matters. the idea of it being a vendetta throw it out the window. >> for ackman this is a super bowl, for karl this is practice. is that a fairway to look at it. >> karl knows much like that chart i brought up at the end of the day, yeah, the fundamentals may work in your favor. i was 100% right. that company filed bankruptcy. itch squeezed out of that and bought in and that stock doubled. that hurts. just look at that chart. 1991 i still remember. i still feel it all over my body and that's why you have to pay attention here. >> we'll get some more clarity from carl in 15 minutes.
let's bet to rick santelli in chicago. hey, rick. >> hi, carl. i want to welcome for the second day, matt fabian from municipal market advisors. build america bond bad program. how will that in muni land get affected by both the potential issues of the sequester and the notion that revenues may be back on the table, of course in the form of trying to raise more money whether through taxes or any potentially the babs program. >> build america bonds are taxable muni bonds where a portion is subsidized by federal government. under the current sequester plan small amount of 5% of that subsidy payment would get held back through sequester. that is effectively infuriated the issuers that were promised this wouldn't happen. it infuriated the investors
because there's some of these build america bonds which become callable. investors were promised that would never happened. so it makes it a very sort of difficult time for the sector. i want also really kms the potential for that sector, those bonds to ever come back on the market. >> on the revenue side are there issues there too? >> as far as, you know, regular muni bonds for sure. tax exempt muni bonds are a large cost, annual cost to the federal government because of the exemption. both democrats and the republicans would probably like at some point to get that money to use it for their own purposes, democrats to increase spending, republicans to decrease marginal tax rates. the only thing that our sector that muni bonds and muni issuers have going for us this congress has an inability to do anything. that means that something like fax reform, if they can get through the sequester without
doing anything related to taxes that means that tax reform becomes an unnecessary thing. they don't have to do it. it assistant crisis. anything they don't have to do they won't do at least in our opinion. >> we have 40 seconds left, matt. can you give us a synopsis. we had an upgrade in california, illinois my state now the worst with regard to rating but there are decent munis to be purchased if you match the right risk/reward. can you tell bus that? >> illinois as a state is almost -- the risk of them defaulting is infiniteesmal. you can pick up 80 basis points. you're not increasing your default risk at all for that position. so you have more downgrade risk for your portfolio. but still you're picking up an awful lot of income for that trade. >> so basically i'm going summarize real quickly the california munis got really rich and tightened up a lot and that
takes away some of the incentive to hold them. matt, thank you for coming back. you're a great guest. have a wonderful three day weekend. carl, back to you. >> see you soon. when we come back the s.e.c. probing some of this unusual options activity ahead of that heinz buffet deal. did somebody know something somewhere. counting down the end of the day. icahn with wapner in about ten minutes. don't go away. try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase.
regulators looking into the buy out of hooipts. the new york times reporting the investigation centers around an unusual spike in heinz call openings ahead of the deal. average trading volume in heintz calls, 820 contracts a day. monday and tuesday well below before spiking on wednesday to over 3400 contracts more than four times the daily average. of those 3400 contracts, 22 or 65% were done in three big block trades, maybe by one, two, or three investors. they are all june calls. a lucky smart or surprisingly informed move given thursday morning's news that warren buffett was buy heinz for $23 million. the premium over wednesday's
closing price of $64.48. netting shareholders and those holders of the calls a healthy profit. the case reportedly building on another insider probe that fold 3 gs 2010 buy out of burger king. 3 g declined to comment. . heinz said it hasn't been contacted by the s.e.c. i like the way you put that. surprisingly informed view. diplomatic. thanks. for more on the inquiry of heintz option trading i want to bring in the regional direct of the s.e.c. in new york city now a senior partner at myers and hind. does this smell dirty? >> absolutely. as a former s.e.c. prosecutor i know when you see a spike in the options trading like we saw before the heintz deal was announced it's a very suspicious move and we have to remember
that in particular options are very leveraged investment products so people that have inside information that want a profit on it will often go ahead and buy options because you can make a lot more money if the deal goes in your favor than just buying the underlying stock. >> right. so let's pretend for a moment there was some ugly activity. it's happening at a pretty interesting time. the s.e.c. is making this big pr push that their enforcement actions is more severe. some leadership changes. how does that change the way they will approach this specific case? >> insider trading has been a top priority at the s.e.c. for the past three years. we've seen the increased use of also criminal penalties for insider trading. i think that trend is definitely going to continue. mary jo white the nominee to be the chairwoman has a background as a federal prosecutor. she was very aggressive on wall street crackdowns when she was the prosecutor. we'll see the trend at the
s.e.c. continuing with very tough sanctions when they catch people committing insider trading violations. >> up don't think this actually slows down the process of the acquisition itself >> no. typically when the s.e.c. launches an investigation like this you're talking about outsiders or individuals or people who may have been tipped off. so it's very, very unlikely that an s.e.c. inquiry involving insider trading will have any impact on the deal itself or its time frame. >> do you think they are interested in given their new push to convince the street that they are an effective cop on the beat, that they will take an episode like this and try to make an example of someone in a way they wouldn't have before? sflul. one of the key principles of the s.e.c. enforcement program is deterrence. when they do catch people they want to make an example and say we'll get tough on people and we're not just going take away the profits they made we ill impose on top of that civil penalties and jail time.
so the s.e.c. has been getting very aggressive. the other thing they've been doing is acting very quickly. i wouldn't be surprised over the next couple of days whether we see the s.e.c. perhaps go into court to try at least freeze the proceeds in these accounts to prevent them from being either wired out or if there's investors overseas to have it taken out of the united states. so i think we'll see some pretty aggressive and timely s.e.c. action on this case. >> finally we've done some reporting of our own in terms of looking at the advances they made. one is just the sheer data mining. they are so much better at mining through data even relatively straightforward cases like this than say they were five or six years ago? >> the s.e.c. has been making a big push to upgratd its computer systems and ability to northern the vast quantity of data that has its availability to them and we're talking about real-time monitoring of market and the trading activity. so the s.e.c. can get out ahead of any problems as they come up. >> we'll see what happens. robert, thanks for entrepreneur
site. interesting. robert heim. when we come back we'll get some final thoughts on the markets. icahn and wapner coming up live at the top of the hour. get ready for round two. we're back in a minute. [ whirring ] [ creaking ] [ male announcer ] trophies and awards lift you up. but they can also hold you back. unless you ask, what's next? [ zapping ] [ clang ] this is the next level of performance.
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